It is time for the Spirit Airlines loyalty program to grow up. Nearly 15 years after the carrier first brought a frequent flyer component into its operations, the FreeSpirit program is relaunching in January, reflecting the carrier’s refreshed approach to the passenger experience and a shifting competitive landscape. And the new version appears to be far more rewarding, or at least it holds that potential.
The next logical thing for us to work on, now that we’re proud of the guest experience, is the loyalty program. It’s now time to make sure that we relaunch the loyalty program, reimagined from the ground up, to ensure that the value low fare plus ancillary model is reflected in our loyalty program.
– Matt Klein, Chief Commercial Officer
Points last a full year now without activity rather than just 90 day, making it a program that can work for the occasional traveler. And that’s just the beginning of how the changes play out.
Revenue-Based, with a Twist
Of course the new FreeSpirit loyalty program is revenue-based. That’s hardly a surprise for any program at this point, much less one tied to an airline so focused on unbundling. But Spirit takes (at least) three different approaches to this.
For reward points earning is tied strictly to spend on fares, with a relatively generous 6 points per dollar base earning rate. Spend on the “A La Smarte” ancillary fees and services earn double. With Spirit’s focus on that line of business, and the higher margins it delivers, the more lucrative earning rates for the loyalty program makes a ton of sense here.
And then there is earning towards status. That comes in at one point per dollar across the board.
Status Tiers that Matter
The new FreeSpirit program adds a pair of elite status tiers for frequent travelers or higher spenders. This is one of the evolutionary steps that focuses the program much more on the business travel market.
Silver status is earned at $2,000 in base spend or $20,000 in co-brand credit card spend. Gold status comes at $5,000 of airline spend or $50,000 on the credit card. And the two earning channels mix-and-match, so a little spending on the credit card can top off the travel side. Status benefits are delivered immediately upon qualification and are valid through the following calendar year.
Not only do the tiers exist, but they deliver real value to passengers, perhaps more than should be expected from a ULCC airline.
Bonus points earning (8/$ for Silver, 10/$ for Gold) is a certainty. But some of the other benefits might come as a surprise. At the Gold tier, for example, passengers no longer pay fees for a litany of ancillary products:
- Advance seat assignment (including exit row seats, but not BFS)
- Priority security
- Priority boarding
- Carry-on bag
- Checked bag
- One free flight change (“Flight Flex”)
- A drink and snack on board
For the growing segment of small business travelers that use Spirit these benefits can match or even exceed the value presented by legacy carriers in some situations.
Chief Commercial Officer Matt Klein is very aware of the value that segment brings to the carrier and hopes that the new program helps attract more of that share as business travel resumes. Even if it means giving up some of the ancillary revenue, he’s convinced the numbers work in the airline’s favor, “Our belief is that if we can create higher engagement with a Gold member we’re also going to see more overall spend with that member. And through a revenue management process we’ll be able to have more demand in that funnel closer to departure. It all works together with revenue management… We think that getting to Gold is extremely valuable. We want people to get to Gold. And if we have enough people get to Gold the overall spend validates the benefits you then earn.”
Points Pooling, with a catch
Program members can pool points towards redemption, a feature that is generally seen as very consumer-friendly in the program. There is a major catch, however. To create a pool a member must have elite status or hold the credit card. Without one of those a pool cannot be established.
Points from the pool can be redeemed by any member, with the oldest points of all members being consumed first when a redemption is made.
There are no restrictions on who can join in to a pool (i.e. same family, address, etc.) but members can only shift between pools once every 90 days.
Partner Growth Potential
The in-house earning news is interesting, but loyalty programs truly thrive when they offer a robust partner ecosystem as well. Spirit recognizes that and expects that the new FreeSpirit will deliver a strong foundation on which to expand what has historically been a weaker portion of the program. Sid Krishna, Head of Loyalty and Co-Brand, explains that the carrier is actively working with all of its existing partners to add redemption rewards, as well as “looking at options to have redemptions with hotels, rental cars, and travel package partners. That’s going to be the key next step.”
The HUGE Unanswered Question
With all of the details shared Spirit is holding one bit back: What are the points really worth??
Redemptions will be revenue-based, just like earning, but not at a fixed rate. The company will vary the points value within a range, similar to how JetBlue or Southwest Airlines operate their frequent flyer redemption rates. We do know that the historical big shift in points value for credit card holders disappears, but the new program promises last seat availability on every flight.
Reward flights will start at 2,500 points, or at 1,000 points plus a cash component. But beyond that we have no details on points value. That’s an unfortunate bit to be missing as the program is unveiled.
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